Correlation Between WIMFARM SA and Richardson Electronics

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Can any of the company-specific risk be diversified away by investing in both WIMFARM SA and Richardson Electronics at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining WIMFARM SA and Richardson Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WIMFARM SA EO and Richardson Electronics, you can compare the effects of market volatilities on WIMFARM SA and Richardson Electronics and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in WIMFARM SA with a short position of Richardson Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of WIMFARM SA and Richardson Electronics.

Diversification Opportunities for WIMFARM SA and Richardson Electronics

-0.01
  Correlation Coefficient

Good diversification

The 3 months correlation between WIMFARM and Richardson is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding WIMFARM SA EO and Richardson Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Richardson Electronics and WIMFARM SA is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on WIMFARM SA EO are associated (or correlated) with Richardson Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Richardson Electronics has no effect on the direction of WIMFARM SA i.e., WIMFARM SA and Richardson Electronics go up and down completely randomly.

Pair Corralation between WIMFARM SA and Richardson Electronics

Assuming the 90 days horizon WIMFARM SA is expected to generate 1.71 times less return on investment than Richardson Electronics. In addition to that, WIMFARM SA is 2.36 times more volatile than Richardson Electronics. It trades about 0.01 of its total potential returns per unit of risk. Richardson Electronics is currently generating about 0.06 per unit of volatility. If you would invest  1,312  in Richardson Electronics on October 7, 2024 and sell it today you would earn a total of  46.00  from holding Richardson Electronics or generate 3.51% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

WIMFARM SA EO  vs.  Richardson Electronics

 Performance 
       Timeline  
WIMFARM SA EO 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days WIMFARM SA EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, WIMFARM SA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.
Richardson Electronics 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Richardson Electronics are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Richardson Electronics reported solid returns over the last few months and may actually be approaching a breakup point.

WIMFARM SA and Richardson Electronics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with WIMFARM SA and Richardson Electronics

The main advantage of trading using opposite WIMFARM SA and Richardson Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WIMFARM SA position performs unexpectedly, Richardson Electronics can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Richardson Electronics will offset losses from the drop in Richardson Electronics' long position.
The idea behind WIMFARM SA EO and Richardson Electronics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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